A and B are partners sharing profits in the ratio of 2 : 1. C is admitted for the 1/4th share of profits, who brings ₹20,000 as capital. After all adjustments related to goodwill, revaluation of assets and reassessment of liabilities etc, Capital of A and B are ₹45,000 and ₹15,000 respectively. It is agreed that partners capitals should be according to the new profit sharing ratio.
Determine the new capital of B.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) - ₹20,000.
Old ratio between A & B = 2:1
C admits with 1/4
Let total share =1
Remaining share after C = 1-1/4
= 3/4
This 3/4 will be divided between old partners in old ratio.
New share of A = 3/4 x 2/3
= 6/12
New share of B = 3/4 x 1/3
= 3/12
New ratio of A, B & C = 6/12 : 3/12 : 1/4
= 6/12 : 3/12 : 3/12 OR 6:3:3 OR 2:1:1
C's capital for 1/4 share = ₹20,000
Total capital on C's basis = 20,000 x 4
= ₹80,000
B's capital = 80,000 x 1/4
= ₹20,000